Correlation Between Joint Stock and Zoom Video

Can any of the company-specific risk be diversified away by investing in both Joint Stock and Zoom Video at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Joint Stock and Zoom Video into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Joint Stock and Zoom Video Communications, you can compare the effects of market volatilities on Joint Stock and Zoom Video and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Joint Stock with a short position of Zoom Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and Zoom Video.

Diversification Opportunities for Joint Stock and Zoom Video

0.31

Correlation Coefficient

Joint Stock  Zoom Video

Weak diversification

The 3 months correlation between Joint and Zoom is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock and Zoom Video Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoom Video Communications and Joint Stock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Joint Stock are associated (or correlated) with Zoom Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoom Video Communications has no effect on the direction of Joint Stock i.e., Joint Stock and Zoom Video go up and down completely randomly.

Pair Corralation between Joint Stock and Zoom Video

Given the investment horizon of 90 days Joint Stock is expected to generate 8.25 times less return on investment than Zoom Video. In addition to that, Joint Stock is 1.13 times more volatile than Zoom Video Communications. It trades about 0.02 of its total potential returns per unit of risk. Zoom Video Communications is currently generating about 0.17 per unit of volatility. If you would invest  6,879  in Zoom Video Communications on September 22, 2024 and sell it today you would earn a total of  1,681  from holding Zoom Video Communications or generate 24.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Joint Stock  vs.  Zoom Video Communications

Joint Stock

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Joint Stock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Zoom Video Communications

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zoom Video Communications are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Zoom Video displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joint Stock and Zoom Video

The main advantage of trading using opposite Joint Stock and Zoom Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Stock position performs unexpectedly, Zoom Video can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zoom Video will offset losses from the drop in Zoom Video's long position.

The idea behind Joint Stock and Zoom Video Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.